South Korea to Dispose of 216 Bitcoins in First Public Auction

The South Korean government will hold its first public auction of bitcoins that were seized from criminal proceeds, according to local publications. In doing so, the economic value of bitcoin will be recognized by the country for the first time.

Also read: Why South Korean Bitcoin Adoption Could Outpace Most Other Countries This Year

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Korean Government’s First Public Bitcoin Auction

The Korea Asset Management Corporation (KAMCO) has decided to auction off 216 bitcoins of criminal proceeds seized in April, according to local publications on Wednesday. KAMCO is a government-owned asset management company in South Korea. It manages state-owned properties, collects overdue taxes, as well as purchases and resolves non-performing loans of financial institutions.

Since seizing bitcoins, the organization has been contemplating what to do with the digital currency since there was no precedence. On Wednesday, MSN Korea quoted a KAMCO official saying (loosely translated):

It is the first time a virtual money auction will be held, but it seems to be similar to stocks that have changed prices.

The 216 bitcoins were confiscated in April by the Southern Gyeonggi Provincial Police Agency from an operator of an “obscene” website which had generated about 1.7 billion won from 1.2 million members. It was the first time a domestic investigative agency seized digital currency as a criminal profit.

Subsequently, the price of bitcoin has more than doubled since the seizure. Its value rose from 260 million won to 673 million won (approximately $596,500 USD) at press time on popular Korean bitcoin exchange Korbit.

Recognizing Economic Value of Bitcoin

According to South Korean Criminal Procedure Law, when a court confiscates an asset from an investigative agency, it becomes the property of the state, The Seoul Economic Daily explains. If forfeited, the asset will be valued and auctioned off to the treasury. An official of the prosecution conveyed (loosely translated):

Since the state has ownership rights to the asset, if it is forfeited, the state agency, such as the prosecution or the police, will be able to publicize the object for sale on the website of the Asset Management Corporation with ownership rights.

The commission on this bitcoin auction is estimated to be about 20 million won or 3% of the proceeds. It will be deducted from the balance and the remainder transferred to the treasury.

“Real estate and securities other than legal currency are regulated by the presidential decree so that they can be sold by the presidential decree,” KAMCO explained. “Virtual currencies are not included in the public auction exemption, so it is possible to dispose of it.”

The representative of the prosecution noted, “once the prosecution goes to a bitcoin auction, the social controversy over whether or not virtual currency should be recognized is actually over,” The Seoul Economic Daily reported. MSN Korea added (loosely translated):

As the public auction process proceeds, domestic investigators and public institutions will be the first to officially recognize the economic value of virtual money.

What do you think about the Korean government auctioning bitcoins and in doing so recognizing its economic value? Let us know in the comments section below.